Know Your Business (KYB)
Know Your Business, or KYB, is the verification of a corporate customer rather than an individual: that the entity legally exists, who owns and controls it, and what it actually does. It is the corporate counterpart to KYC, and the ownership chain is the hard part.
Also called: business verification · corporate KYC
Know Your Business answers three questions about an organization: does it legally exist, who owns and controls it, and what does it actually do. The evidence is documentary — certificate of incorporation, a current registry extract, constitutional documents, the register of directors and shareholders, licenses where the activity is regulated — plus enough about premises, staff and counterparties to show the business is real rather than a shell.
The ownership work is where the effort goes and where files are most often left unfinished. Ownership has to be traced through to the natural persons who ultimately own or control the entity — the ultimate beneficial owners — who are then identified, verified and screened like any individual customer. Where nobody meets the ownership threshold, the people who exercise control by other means have to be identified instead.
Registries help less than people expect. Many accept self-declared information without verifying it, some are not open to the public, and several jurisdictions still permit nominee shareholders whose entry on the register reveals nothing about who is behind them. KYB is the corporate limb of Know Your Customer and feeds the same customer due diligence risk picture; it is not a separate regime with a separate standard.
In practice
The work sits in unwinding the ownership chain to the humans behind it. A registry extract naming a corporate shareholder has not completed KYB — it has moved the question one layer down.
Example
A UK company’s registry extract lists one shareholder: a company registered offshore. Filing the extract completes nothing. That entity’s own register names a nominee, and behind the nominee sits a trust. KYB is finished when the natural persons who own or control the chain are identified and verified, or when the firm concludes it cannot establish them and declines the relationship.
Commonly confused with
| Term | How it differs |
|---|---|
| Know Your Customer | KYC is usually used for verifying an individual; KYB applies the same obligation to an entity, where legal existence and the ownership chain have to be established first. |
| Ultimate Beneficial Owner | The UBO is the natural person KYB is trying to reach; KYB is the process that gets there and evidences how. |
See also
- Know Your CustomerKnow Your Customer, or KYC, is the process of identifying and verifying a customer before a business relationship starts and keeping that understanding current while it lasts, so a firm knows who it is actually dealing with. Identity verification is the first step of KYC, not the whole of it.
- Ultimate Beneficial OwnerThe ultimate beneficial owner is the natural person who ultimately owns or controls a customer, identified by tracing ownership up through holding companies, trusts and nominees. Twenty-five percent is the common anchor in the United States, the United Kingdom and the European Union, but each states it differently and control is tested alongside it.
- Customer Due DiligenceCustomer due diligence, or CDD, is the baseline set of checks a regulated firm performs on a customer: who they are, who owns and controls them, and what activity to expect. It is done at onboarding and then kept current for as long as the relationship lasts, with risk rather than a fixed calendar setting when it is revisited.
- Enhanced Due DiligenceEnhanced due diligence, or EDD, is the additional scrutiny applied where money laundering risk is higher. In the UK and the EU it is mandatory in prescribed cases — politically exposed persons, high-risk countries, correspondent banking — as well as wherever a firm’s own risk assessment says the baseline is not enough.